The Association for Financial Markets in Europe (AFME) has outlined four areas of recommendations for the advancement of digital finance in the EU, arguing that new technologies will increase access to finance and improve capital market development in the real economy.
One key area is a detailed look at how tokenisation and distributed ledger technology (DLT) can contribute to more efficient markets and drive growth. Using the technology could improve access to capital markets and contribute to democratisation, the association stated, and could contribute to safer and more efficient payments, settlement, and securities lifecycle processes.
Continuing the theme of harnessing recent innovations, AFME commented that AI could be used to ‘transform’ capital markets and financial services – but wanted that the risks and challenges associated with the technology need to be taken into account.
Supporting an effective data ecosystem must also be prioritised, the report said, affirming that the proposed Financial Data Access (FiDA) framework in the EU could promote innovation and improve safety and efficiency. However, it added that the framework needs stronger safeguards and a clearer scope to be workable, advising a gradual implementation once ready.
Continued preparations for the implementation of the Digital Operational Resilience Act (DORA) are also vital.
Stefano Mazzocchi, managing director for advocacy at AFME, commented: “Banks have been at the centre of a profound digital transformation, a process which will continue and accelerate in the coming years. As the EU begins a new policy cycle, digitalisation of finance has the potential to support the development of capital markets.
“By increasing efficiency, lowering costs, boosting transparency and availability of information and allowing greater access to data, digital technologies can support the Capital Markets Union project and allow greater access to capital markets both for entrepreneurs and institutions looking for funding, and generate returns for investors. With its digital finance strategy, the EU has been an early mover in this area and we look forward to continuing engagement and dialogue with all stakeholders to facilitate digital innovation.”
©Markets Media Europe 2024
